Human Events

NPR wonders if a bad economy is good for the economy

What’s your favorite media meme deployed in an embarrassingly obvious attempt to protect President Downgrade from criticism over his record? Unemployment is great, because it gives you time to work on your hobbies and hang out with your family. “Staycations” are cool, because travel to remote vacation destinations is a hassle. High gas prices are da bomb, because driving is dangerous, and spending hours in your car is an unhealthy bore.

Submitted by National Public Radio for your consideration as the top contender: “Is Moderate Growth Actually Good For the Economy?”

On Friday, the government reported that the economy grew at a 2.2 percent pace in the first quarter, down from the 3 percent rate at the end of 2011. The Federal Reserve this week said it expects growth to “remain moderate over coming quarters and then to pick up gradually.”

Common sense says high growth rates are good and slower, more modest ones are not so good. But is that always the case? After all, the “irrational exuberance” of the early 2000s helped bring on the recession as people borrowed and spent their way to prosperity.

Economists say growth will remain low and consumers will be cautious as long as unemployment stays high. Last month, the jobless rate stood at 8.2 percent.

Isn’t Obama the dreamiest? He actually found the perfect economic porridge! Not too hot, not too cold… why, it’s just right!

Bizarrely, the NPR article goes on to quote four economists… all of whom say that, on the contrary, modest growth stinks. We’re nowhere near the point where the 2.2 percent growth for the first quarter, as the Commerce Department just reported, could be considered acceptable. In fact, William Dickens of the Brookings Institution says “we’re fooling ourselves if we think any rate of growth that isn’t bringing the unemployment rate down rapidly is adequate.”

If you can get past the weird love note to President Boyfriend in the headline, the discussion from the four economists cited by NPR is very interesting. Chris Christopher of IHS Global says something I was thinking of adding in an update to my post on the new GDP numbers, so I’ll just quote him instead:

I do think that many Americans have changed their behavior. They are very cautious now. We are going through a structural shift, and that structural shift is about a change in behavior. Our research shows that when we analyze consumer confidence and consumer spending, it shows that there is a change going on — more so than in past recessions, at least since World War II.

I was worried about this when pondering the long-term effects of the Obama quagmire. We want an economy of dynamism, risk-taking, investment, and high ambition, not a dreary soviet that accepts perpetual stagnation as the New Normal, and devolves accordingly to adapt. The last thing we need is for America to grow comfortable on its knees. To suggest that “moderate” growth is good, because it breeds a “cautious” population, is to endorse a docile populace of sheep, who can only dimly remember the bygone golden age when they were lions.

Speaking of dim memory, the partisans of NPR might want to crack a history book and look up the true origin of the phrase “irrational exuberance.” It was not popularized in the early 2000s. It was contributed to political culture by Federal Reserve chairman Alan Greenspan, who was talking about the dot-com bubble of the 1990s. You remember the 1990s, don’t you, kids? If not, I’ll give you a hint: George Bush was not President at the time.

You don’t often see an article whose body entirely refutes its premise, and actually includes a quote describing the premise as foolish. Why, it’s almost enough to make you cancel your subscription to NPR! But you can’t.

John Hayward began his blogging career as a guest writer at Hot Air under the pen name "Doctor Zero," producing a collection of essays entitled Doctor Zero: Year One.
He is a great admirer of free-market thinkers such as Arthur Laffer, Milton Friedman, and Thomas Sowell. He writes both political and cultural commentary, including book and movie reviews. An avid fan of horror and fantasy fiction, he has produced an e-book collection of short horror stories entitled Persistent Dread.
John is a former staff writer for Human Events. He is a regular guest on the Rusty Humphries radio show, and has appeared on numerous other local and national radio programs, including G. Gordon Liddy, BattleLine, and Dennis Miller.